The Effect of Medicaid Physician Fee Increases on Health Care Access, Utilization, and Expenditures

To evaluate the effect of Medicaid fee changes on health care access, utilization, and spending for Medicaid beneficiaries.

We use the 2008 and 2012 waves of the Medical Expenditure Panel Survey linked to state-level Medicaid-to-Medicare primary care reimbursement ratios obtained through surveys conducted by the Urban Institute. We also incorporate data from the Current Population Survey and the Area Resource Files.

Using a control group made up of the low-income privately insured, we conduct a difference-in-differences analysis to assess the relationship between Medicaid fee changes and access to care, utilization of health care services, and out-of-pocket medical expenditures for Medicaid enrollees.

We find that an increase in the Medicaid-to-Medicare payment ratio for primary care services results in an increase in outpatient physician visits, emergency department utilization, and prescription fills, but only minor improvements in access to care. In addition, we report an increase in total annual out-of-pocket expenditures and spending on prescription medications.

Compared to the low-income privately insured, increased primary care reimbursement for Medicaid beneficiaries leads to higher utilization and out-of-pocket spending for Medicaid enrollees.